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Feature
Steel Tariffs and CBAM: Why Building Material Prices Are Rising and What the Industry Needs to Know
WALSALL WHEELBARROW COMPANY calls for greater awareness as new Government policies reshape UK manufacturing and the construction supply chain.
The UK building materials sector is entering one of the most significant periods of legislative and economic change in recent decades, with new steel import tariffs already affecting manufacturers and the Carbon Border Adjustment Mechanism( CBAM) set to transform the way construction products are imported from January 2027.
While many merchants have seen an increasing number of supplier cost price increases throughout 2026, the reasons behind those increases are often misunderstood. Although inflation, energy costs, wages and transport continue to place pressure on manufacturers, two major Government policies are now emerging as some of the biggest drivers of rising costs across the construction supply chain.
The Walsall Wheelbarrow Company is encouraging merchants, distributors, buying groups and contractors to understand the implications of these changes as the industry prepares for what many believe will be one of the biggest shifts in UK manufacturing for decades.
What is the UK Steel Tariff Strategy?
Introduced on the 1st July 2026, the UK Government’ s Steel Tariff Strategy is designed to strengthen domestic steel production by encouraging manufacturers to source steel from UK producers wherever possible.
Under the policy, a 50 % tariff is applied to a range of imported unfabricated steel products, including coil, slab and sheet steel that can also be manufactured within the UK.
Although tariff-free import quotas are available, these are allocated on a quarterly, first-come, first-served basis and vary depending on the country of origin. For many UK manufacturers, particularly SMEs, the quotas are insufficient to meet production demand or obtain specialist grades that are not readily available from UK mills.
Where quotas have been exhausted, manufacturers are left with little alternative but to purchase higher-cost domestic steel or pay the additional import tariff, creating significant cost increases throughout the manufacturing sector.
What about the Carbon Border Adjustment Mechanism( CBAM)?
The next major change arrives on 1st January 2027 with the introduction of the Carbon Border Adjustment Mechanism( CBAM).
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Unlike the steel tariff policy, CBAM will affect a much broader range of construction materials, including steel, aluminium, iron, cement, fertilisers, hydrogen and many imported fabricated products such as screws, fixings and fasteners.
The policy has been introduced to prevent“ carbon leakage”, ensuring imported products face similar carbon costs to goods manufactured within the UK.
Importers will be required to calculate and declare the embedded carbon emissions associated with products entering the country, with taxation applied according to those emissions.
The Government has described CBAM as one of the largest administrative programmes ever undertaken by HMRC, meaning businesses will not only face additional taxation but also significant reporting and compliance requirements.
How will this affect prices?
For manufacturers, the combined impact of steel tariffs and CBAM represents one of the largest cost pressures experienced in recent years.
Even businesses sourcing all their steel domestically are unlikely to avoid higher costs, as UK-produced steel continues to carry higher manufacturing costs through labour, energy and environmental compliance.
Industry forecasts suggest steel prices could increase by up to 50 % by the end of the first quarter of 2027 compared with current market levels.
While manufacturers continue investing heavily in automation, energy efficiency and operational improvements to minimise the impact, increases of this magnitude cannot realistically be absorbed entirely.
As a result, merchants should expect continued cost price increases across a wide range of steel-intensive building products throughout the coming months.
Industry Collaboration Is Essential
Recognising the potential impact on British manufacturing, The Walsall Wheelbarrow Company has been working alongside manufacturers, industry bodies and Government representatives to ensure the practical implications of these policies are understood.
Working with organisations including Thomas Dudley, JCB and the Builders Merchants Federation( BMF), the company has supported calls for Government to:
• Exempt steel grades and material specifications that are not currently available from UK manufacturers.
• Regularly review tariff-free quotas to ensure they accurately reflect market demand.
• Create a level playing field for UK manufacturers competing against distributors importing fully assembled products from overseas.
Supporting Merchants Through Transparency
Tom Fisher, Sales Manager at The Walsall Wheelbarrow Company, believes clear communication across the supply chain has never been more important.
“ Merchants are understandably questioning why cost price increases continue to come through, and it’ s important the industry understands that these aren’ t simply manufacturer-led increases. They are being driven by fundamental changes to the way raw materials are sourced and taxed within the UK. Transparency across the supply chain has never been more important, and by working together manufacturers and merchants can plan ahead and make informed commercial decisions.”
Investing Despite the Challenges
Alongside its work with industry stakeholders, The Walsall Wheelbarrow Company continues to invest in the future of British manufacturing.
Over the past 14 years the business has invested more than £ 5 million into its manufacturing facilities to improve productivity, reduce energy consumption and increase automation.
Further investment planned for 2027 will increase automation across almost 90 % of manufacturing processes, strengthening efficiency while reinforcing the company’ s long-term commitment to UK manufacturing.
Jonathan Thacker, Operations Director at The Walsall Wheelbarrow Company, said:
“ British manufacturing has always adapted to change, and while these policies undoubtedly create new challenges, they also reinforce the importance of investing in efficiency, automation and long-term resilience. Our continued investment ensures we’ re well placed to support our customers while maintaining the quality, reliability and service that British manufacturing is known for.”
Looking Ahead
The introduction of steel tariffs and CBAM represents a significant turning point for the construction products industry.
While the transition will inevitably bring challenges for manufacturers, merchants and distributors alike, greater awareness, collaboration and continued investment will be key to protecting the long-term competitiveness of UK manufacturing.
By working together across the supply chain, the industry can navigate these changes while continuing to deliver quality British-made products and supporting a more resilient construction sector.